Middlemen in Agricultural Marketing

1. MARKET INTERMEDIARIES AND THEIR
ROLE
HRIDYA S

2. MARKET INTERMEDIARIES
• Also known as “Middlemen’’
• Middlemen are those individuals or business concerns which
specialize in performing the various marketing functions and
rendering such services as are involved in the marketing of goods.
• Involved in different stages of marketing process.

3. MANUFACTURER WHOLESALER RETAILER CONSUMER
TWO INTERMEDIARIES CHANNEL

5. MIDDLEMEN
Merchant
middlemen
Agent
middlemen
Speculative
middlemen
Processors
Facilitative
middlemen

6. MERCHANT MIDDLEMEN
• Individuals who take title to the goods they handle.
• They buy and sell on their own and gain or lose, depending on the
difference in the sale and purchase prices.
• May suffer loss with a fall in the price of the product.
• Four types:
oWholesalers
oRetailers
oItinerant Traders and Village Merchants
oMashakhores

7. Wholesalers
 They buy and sell food grains in large
quantities.
 May buy either directly from farmers or
from other wholesalers.
 Sell food grains either in the same market or
in other markets.
 Sell to retailers, other wholesalers and
processors.
 Do not sell significant quantities to ultimate
consumers
 Own godowns for the storage of the
produce.

8. Functions of a Wholesaler
They assemble the goods from various localities and areas
to meet the demands of buyers
They sort out the goods in different lots according to their
quality and prepare them for the market
They equalize the flow of goods by storing them in the peak
arrival season and releasing them in the off-season

9. They regulate the flow of goods by trading with buyers and
sellers in various markets
They finance the farmers so that the latter may meet their
requirements of production inputs
They assess the demand of prospective buyers and
processors from time to time, and plan the movement of the
goods over space and time.

10. Retailers
Buy goods from wholesalers and sell
them to the consumers in small
quantities.
Producers’ personal representatives to
consumers
Closest to consumers in the marketing
channel

11. Itinerant Traders and Village Merchants
 Itinerant traders - Petty merchants who move from village to village, and
directly purchase the produce from the cultivators.
 They transport it to the nearby primary or secondary market and sell it there.
 Village merchants - have their small establishments in villages.
 They purchase the produce of those farmers who have either taken finance
from them or those who are not able to go to the market.
 Also supply essential consumption goods to the farmers.
 Often visit nearby markets and keep in touch with the prevailing prices.
 They either sell the collected produce in the nearby market or retain it for
sale at a later date in the village itself.

12.  Local term used for big retailers or small wholesalers sealing in
fruits and vegetables.
 Earlier, used to deal only in one or two fruits and vegetables
 Usually sell to the bulk consumers like hotelwalas, small
retailers/ vendors in lots of around 5-10 kg each
 Now they are more like ordinary retailers.
Mashakhores

13. AGENT MIDDLEMEN
• Act as representatives of their clients.
• They do not take title to the produce and, therefore, do not own it.
• They merely negotiate the purchase and/or sale.
• They sell services to their principals and not the goods or
commodities.
• They receive income in the form of commission or brokerage.
• Two types:
oCommission Agents or Arhatias
oBrokers

14. Commission agents
A person operating in the wholesale
market who acts as the representative
of either a seller or a buyer
 Physical handling of the produce,
arranges for its sale, collects the price
from the buyer, deducts his expenses
and commission, and remits the
balance to the seller.

15.  Unregulated market – Two types:
• Kaccha Arhatias
• Primarily act for the sellers, including farmers.
• Sometimes provide advance money to farmers and itinerant
traders on the condition that the produce will be disposed of
through them.
• Charge arhat or commission in addition to the normal rate of
interest on the money they advance.
• Pacca Arhatias
• Acts on behalf of the traders in the consuming market.
• Processors and big wholesalers in the consuming markets
employ pacca arhatias as their agents for the purchase of a
specified quantity of goods within a given price range.

16.  Regulated market
• A Class trader
• Keeps an establishment – a shop, a godown and a rest house
for his clients.
• Preferred by the farmers to the co-operative marketing society
for the purpose of the sale of the farmer’s produce

17. Functions of a Commission agent
Advances 40-50% of the expected value of the crop as a loan to
farmers to enable them to meet their production expenses
Acts as bankers of the farmers. They retain the sale proceeds, and
pay to the farmers as and when the latter require the money
Offer advice to farmers for purchase of inputs and sale of products
Provides empty bags to enable the farmers to bring their produce to
the market

18. Provides food and accommodation to the farmers and their
animals when the latter come to the market for the sale of their
produce
Provides storage facility and advance loans against the stored
product up to 75% of its value
Arranges, if required by the farmer, for the transportation of the
produce from the village to the market
Helps the farmers in times of personal difficulties.

19. Brokers
 Render personal services to their clients in the market
 Unlike the commission agents, they do not have physical control
of the product
 Main function: bring together buyers and sellers on the same
platform for negotiations.
 Their charge is called “brokerage’’
 Renders valuable service to the prospective buyers and sellers, for
they have complete knowledge of the market – of the quantity
available and the prevailing prices.
 Have no establishment in the market.

20. SPECULATIVE MIDDLEMEN
• Takes title to the product with a view to making a profit on it
• Not a regular buyers or sellers of produce
• Specialized in risk – taking
• Buys produce at low prices when arrivals are substantial and sell
in the off – season when prices are high.
• Do the minimum handling of goods
• Makes profit from short-run as well as long-run price fluctuations.

21. PROCESSORS
• Carry on their business either on
their own or on custom basis
• Some processors employ agents to
buy for them in the producing areas,
store the produce and process it
throughout the year on continuous
basis.
• Engages in advertising activity to
create a demand for their processed
products.

22. FACILITATIVE MIDDLEMEN
• Do not buy and sell directly but assists in the marketing process.
• Marketing can take place even if they are not active
• Efficiency of the system increases when they engage in business
• Receives their income in the form of fees or service charges
from those who use their services.

23.  Hamals or Labourers
• Physically move the goods in marketplace
• Does unloading from and the loading on to
bullock carts or trucks
• Assists in weighing the bags
• Performs cleaning, sieving, and refilling jobs
and stitch the bags
• Hub of the marketing wheel.
 Weighmen
• Facilitates the correct weighment of the
produce
• Uses a pan balance when the quantity is small
• Gets the payment for their services through the
commission agent.

24.  Graders
• Sorts out the product into different grades, based on some defined
characteristics, and arrange them for sale
• Facilitates the process of prices settlement between the buyer and the
seller
 Transporters
• Assists in the movement of the produce from one market to another
• Main transport means are the railways and trucks.
 Communication agency
• Helps in the communication of the information about the prices
prevailing, and quantity available, in the market
• The post and telegraph, telephone, newspapers, the radio, Television,
Internet and informal links are the main communication channels in
agricultural marketing.

25.  Advertising Agency
• Enables prospective buyers to know the quality of
the product and decide about the purchase of
commodities
• Newspapers, the radio, television and Internet are
the main media for advertisements.
 Auctioners
• Helps in exchange function by putting the
produce for auction and bidding by the buyers.

26. THANK YOU